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Retail Access to Alternative Investments Top of Mind for Financial Advisors, CAIS Survey Finds

Survey also identifies lack of education as major hurdle to investing in alternatives

Market volatility, interest rate hikes, and a growing lack of confidence in strong returns across public markets have prompted a surge in demand for, and access to, alternative asset classes, according to a recent independent survey conducted by CAIS during the 2022 Morningstar Conference. In addition, more than eight in 10 (80.9%) financial professionals believe that all retail investors should have access to such investments.

Public market assets have generated some of the lowest annual performances for the 60/40 portfolio in the last 20 years.1 More than a third of survey participants (33.6%) believe that the traditional mix of stocks and bonds is no longer effective for investing, while a further 42% assert that the 60/40 portfolio is not as effective as it used to be. Among the respondents who identified as investment or financial advisors, 84% say they are recommending that clients who meet accredited investor requirements should allocate to alternatives.

“As traditional assets face muted expectations, alternative investments may provide a diversified method for investors looking to hedge against increased volatility and potential enhanced returns,” said Matt Brown, CEO and Founder of CAIS. “These survey results validate our conversations with the independent wealth management community, highlighting a growing urgency for access to alternative products. CAIS is answering that call by providing the connectivity and education that advisors can use to meet this demand.”

The survey gathered insights from more than 300 registered investment advisors, financial advisors, and other investment industry experts in attendance at the flagship annual conference in Chicago. Its findings also point to industry-wide scrutiny around the definition of accredited investor – a long-standing threshold for access to alternative asset classes. Almost three-quarters of respondents (74.9%) believe that the SEC’s definition of accredited investor needs to be updated. Among them, 43.6% say that the definition is too rigid, while 41.4% believe that the income threshold for individuals should be lowered. Only 11.5% believe the definition is too lax.

Stringent qualifications are not the only obstacles that participants believe investors face when seeking access to alternative asset classes. Almost seven in 10 respondents (68.98%) cited the lack of education around alternatives as a hurdle to investing in them. Respondents also named high levels of administration and paperwork (37.6%), and concerns around due diligence and compliance processes (34.3%) as difficulties when making allocations.

“As alternative products tailored to the retail wealth channel come to market at a rapid clip, financial advisors may gain comfort by ensuring that they have the necessary knowledge on these complex products giving them confidence to recommend alts to their clients,” said Abby Salameh, CMO and Managing Director of CAIS IQ, an education platform at CAIS. “While access to quality strategies is important, we believe leading with learning may be the key to unlocking their full potential.”

Survey respondents believe that private equity (49.8%), real estate (38.9%) and private credit (33%) are the three alternative asset classes most likely to outperform the market in 2022. Alternative assets are expected to make up to 24% of the global investable market by 2025, up from 12% in 20182.

Survey Methodology

The survey was conducted on May 16-17 at the 2022 Morningstar Investment Conference in Chicago, IL. Respondents were event attendees including RIAs, financial advisors, and other investment industry experts. The data is based on responses from 303 respondents, 107 of whom identified themselves as financial advisors.

About CAIS

CAIS is the leading alternative investment platform for financial advisors who seek improved access to, and education about, alternative investment funds and products. CAIS provides financial advisors with a broad selection of alternative investment strategies, including hedge funds, private equity, private credit, real estate, digital assets, and structured notes, allowing them to capitalize on opportunities and/or withstand ever-changing markets. CAIS also provides an industry-leading learning system, CAIS IQ, to help advisors learn faster, remember longer, and improve client outcomes.

All funds listed on CAIS undergo Mercer’s independent due diligence and ongoing monitoring. Mercer diligence reports and fund ratings are available to advisors on the CAIS password-protected platform. CAIS streamlines the end-to-end transaction process through digital subscriptions and integrated reporting with Fidelity, Schwab, and Pershing, which make investing in alternatives simple.

Founded in 2009, CAIS, a fintech leader, is empowering over 5,300+ unique advisor firms/teams who oversee more than $2.5T+ in network assets. Since inception, CAIS has facilitated over $17B+ in transaction volume as the first truly open marketplace where financial advisors and asset managers engage and transact directly on a massive scale. CAIS has offices in New York, Los Angeles, Austin, and San Francisco.

Securities offered through CAIS Capital LLC, member FINRA, SIPC.

1 HFR, Venn as of April 2022, 60/40 Portfolio represented by S&P 500 Index and the Bloomberg Barclays Aggregate Bond Gross Index.

2 Chartered Alternative Investment Analyst Association, April 15, 2020


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